Thus far in this series of articles, we covered the need to embed fair treatment of customers in the culture of your business, and ensuring that the products you recommend address the real needs of your clients.
Outcome 3 stipulates that you need to ensure that clients receive clear information, and are kept appropriately informed before, during and after the time the financial service is rendered.
The guidelines for small FSPs provide the following pointers:
- Do you use clear explanations of the products when talking to your clients?
- Do you keep your customers informed of the processes and information required by the product suppliers?
- Do you guide clients about the information required by product suppliers?
- How do you disclose information in terms of section 7 of the General Code of Conduct?
Traditionally, the purpose of point of sales material was to sell a product, and not really to ensure the required understanding by the client of how it would address his or her identified needs. Very often, the use of industry terminology confused clients, but the fear of appearing ignorant kept them from asking for clarity. The proposal by the Regulator to introduce standardised product disclosure documentation will go a long way to help comply with this requirement, but until it is introduced, the onus is on you to make sure the client understands what he is buying.
We regularly receive complaints from readers about poor service from product providers. Often, this reflects poorly on the advisor, not the provider. While some providers excel in client care, others clearly lack a culture where TCF is embedded. While this provides an opportunity to use TCF to your advantage by reporting it to the authorities, it also contains a threat in that the provider can very easily terminate your contract, as very few advisor/provider contracts are worded objectively.
Section 7 of the General Code of Conduct provides stipulations on the disclosure of information about the financial services you render and includes both advice and intermediary services. As highlighted above, this needs to be done before, during and after the process. Very often, client contact is a high priority until the deal is concluded, after which we forget about them until the next sales opportunity arises.
This section of the GCoC clearly outlines your post-sales obligations. Very often, Ombud determinations against advisors result from a lack of focus on these requirements. It is not only the product providers who need to comply, especially if there are material facts which need to be conveyed in understandable format to the client.
It is recommended that you study section 7 of the GCoC again, from a TCF perspective, and also discuss it with your staff. This then needs to be documented as part of the proof you may require that TCF, like Jaques Brell, is alive and well and living in your practice.
Please click here to download the guidelines provided by the FSB: